Ledesma - it's speculation,
not tight sugar supply

No, there is no tightness in sugar supply. It may be perceived tightness which sugar traders are speculating on that has driven up the millgate prices of sugar.

As pointed out by CONFED Negros-Panay chairman Luis Tongoy, it is the possible lack of cheap sugar supply by the end of the milling season that sugar traders are trying to beat by stocking up for that prospect.

This was the clarification yesterday by Administrator James Ledesma as to the reason for the high price of domestic sugar.

Actually, Ledesma pointed out, there is more than enough sugar supply with the inventory at 400,000 metric tons to date. The rate of production is about twice the withdrawal every week as we hit the peak months of milling.

"Thus, to say there is physical tightness is simply not true. Prices are high simply because of speculation," he added.

"Much of the quedans being bought every week are simply for positioning; they are not withdrawn as they have not been sold to an end-user yet - this positioning for future use is simply positioning," Ledesma clarified.

Besides, he added, that reports show that there are a number of new players who have entered the various bidding centers, again a clear sight of a market open to speculation.

On the demand side, Ledesma admitted that there is still no clear indication of the trend in the domestic sugar market. Will it go down, flat or up? "We still need a few more weeks to establish the trend on this," he added, pointing out that the figures the SRA is getting are still confusing four months into the milling season.

World market prices, however, continue to go up. That means the cost of bringing in imported sugar is also rising should there be a need in the future to do so. As of this writing, Luis Tongoy noted that the world price had gone up to 15.27 cents a pound. That's the equivalent of about P1,080 per Lkg. landed cost before tariff and profit margin. In short, almost on par with the last week's bidding prices of domestic or "B" sugar.

Ledesma pointed out that the world price has also effectively curtailed sugar smuggling.

"So whatever illegally sourced sugar the market used to get in the past is not party of the equation today. All the ingredients put together explain why we are having this bull run of domestic prices," Ledesma added.

In short, as predicted by the SRA head, there will definitely be no shortage of sugar for the next six months. January stocks will rise close to 500,000 metric tons. By April, that will be more than 600,000 MTs.

SRA, however, pointed out that production is still running at 5.73 percent below last year. Or, this means that SRA expects production to hit the projected 2 million metric tons.

Ledesma said he had to issue the facts to prevent adding fuel to more positioning and speculation that have negative effects on the industry in the long term.

But there was also the alarming news from the United States. DJ Nybot Sugar Review reported that sugar companies in Florida is asking the US agriculture department to allow more sugar into the nation, even though producers are worried about foreign competition in a longer term.

Dow Jones quoted Robert Coker, senior vice president at US Sugar Corp. in Clewiston, as saying that, "Every single care of cane under our control was hurt by Wilma, and now we got some frost damage on top of it."

The reason for the agitation for more sugar imports by the US sugar companies in Florida is that while their crops were trimmed at harvest by Hurricane Wilma, the remaining crop was also hit by frost this month.

Thus, although the US may allocate more of its future quota to the Philippines, this country may not be able to meet such a request.

That may explain the frenzied speculation to gobble as much of domestic stocks as traders could. By the end of the milling season, we may really experience a tightness of supply, not just perception of a tightness, depending on the surge of demand for sugar.

****

Kudos to the Sangguniang Panlungsod of Bacolod for formally informing the foreign affairs department about the overstaying Junior League officials and players of Bacolod who overstayed in the United States post the Senior League Series from 2003 to 2005.

Councilor Ana Marie Palermo was also correct when she asked SP members to secure an official order from the courts if they are to request the DFA to cancel the Philippine passports of the 10 persons. These are softball coach Reynaldo Fuentes, Grace Zaragoza, Rosello Javellana, Teresita and Francis Fuentes, Christine May Claver, Antonio Kilayko, Emmanuel Declines, Edwin Abellana and Marilyn Parcia.

The Philippine Consulate General in New York and San Francisco had already been alerted about the 10.

But it is better if the Philippine Embassy itself is urged by the SP to inform consular officials to notify their US counterparts about these "TNTs" so they could be deported back home after they had violated their promised return to shed light into the controversies regarding the handling of the funds of the Little Leaguers.

But that means, the parents of the students should file the court cases against the 10.

About time Fuentes et al know that Bacolodnons are not just like that, whom they can take for granted.*

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